Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/213072
Authors: 
Brochet, Francois
Limbach, Peter
Bazhutov, Dmitry
Betzer, André
Doumet, Markus
Year of Publication: 
2020
Series/Report no.: 
CFR Working Paper 18-05
Abstract: 
Using a panel of survey-based annual investor relations (IR) rankings of European companies, we provide evidence suggesting that the marginal benefit of IR is greater in countries with capital markets that are less outside-shareholder oriented. For firms located in these countries, we find that IR quality is associated with significantly greater firm visibility, information assimilation, and valuation. The results hold for both the public and private functions of IR, and in terms of market reactions around conference presentations and analyst/investor days. Furthermore, using MiFID II as a shock to firms' information environment, we find a significantly incremental association between IR and information assimilation as well as cost of capital in those countries post 2017. Overall, the evidence suggests that IR is associated with greater marginal benefits in markets where demand for this type of shareholder communication has been historically lower.
Subjects: 
Investor Relations
Transparency
Ownership Concentration
Firm Visibility
Information Asymmetry
Cost of Capital
JEL: 
G14
M41
Document Type: 
Working Paper

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